Distributions that are not dividends are a return of capital and decrease the shareholder's basis.Once basis is reduced to zero, any excess is taxed as a capital gain.

Question

Quizplus · Accepted Answer

Distributions that are not dividends are typically treated as a return of capital, which reduces the shareholder's basis in the stock. Once the basis is reduced to zero, any excess distribution is taxed as a capital gain.

Distributions That Are Not Dividends Are a Return of Capital